Thursday 25 May 2017

Noonan to seek green light from Europe for jobs budget

Fionnan Sheahan, Maeve Dineen and Michael Brennan

Finance Minister Michael Noonan will next week seek approval from the IMF and EU to bring in a mini-budget to create jobs.

A team from the IMF, EU and European Central Bank will arrive in Dublin on Tuesday to begin the first health check on our handling of the €85bn bailout.

The injection of €24bn into the banking sector will be a key move to reassure the IMF and EU that the new Government is sticking to the terms of the deal.

The new Government plans to bring in a €220m package of measures, including halving the lower rate of employers' PRSI and reducing the lower rate of VAT from 13.5pc to 12pc.

The reversal of the cut in the minimum wage is also on the agenda.

But the Coalition will have to offer measures in return to balance the books by either coming up with more spending cuts or tax hikes.

The Coalition is facing a series of tough negotiations next week when the terms of the €85bn bailout are tested for the first time.

Last December's budget, which the coalition is not going to reverse, also set in train a series of taxation and spending targets.

The publication of the Exchequer Returns for the end of March on Monday, showing the amount of revenue raised and expenditure for the first year, will also show if this is on target.

Reneged

The review of the first and second quarter of the bailout comes as the Government continues to defend its decision to pump another €24bn into the banks.

Meanwhile, Public Spending Minister Brendan Howlin rejected suggestions the Labour Party reneged on its election promises.

During the talks next week, the Government will seek to change the terms of the bailout as part of its plans to bring forward a so-called jobs budget next month.

Justice Minister Alan Shatter signalled the Government would now go ahead with the mini-budget.

"The next step is that we bring forward and implement some of the jobs proposals that we promised," he said.

Mr Shatter denied that there had been no burden sharing in the €24bn recapitalisation plan announced by the Government.

"There is burden sharing as part of this deal, in the sense that unsubordinated bondholders are going to be affected by the outcome of what has occurred," he said.

But Fianna Fail said the election promises of Fine Gael and the Labour Party were the first things to be burned by the new Government.

Fianna Fail Senator Darragh O'Brien said it was clear Fine Gael and Labour "deliberately used reckless and unrealistic rhetoric" on banking policy during the general election.

The Government will have to wait until May before concluding a deal with its EU partners on a lower bailout interest rate, EU sources have confirmed.

Irish Independent

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